Friday Four Play: The “Detroit Shock City” Edition
A long, long time ago… I can still remember when General Motors (NYSE: GM) used to make me smile.
And I knew if they had their chance, that they could kick Tesla (Nasdaq: TSLA) in the pants, and maybe investors would be happy for a while.
But electric vehicle (EV) dithering made me shiver with every press conference they’d deliver. Bad news on the doorstep, I could buy one more share.
But yesterday’s news touched me deep inside. It was the day … the combustion engine … died.
Oh my, my Tesla’s gonna get fried!
OK … that’s enough Don McLean for now. Though, I still miss driving my Chevy to the levee. Loved my old S-10 pickup.
While Great Stuff (and the rest of the market) focused on the GameStop (NYSE: GME) war yesterday, General Motors dropped a bombshell on the EV market.
The company pledged to go completely green by 2040 — companywide! Furthermore, GM will only sell zero-emission vehicles by 2035.
Guess who just got back today? Them Detroit boys with their ingenuity. Man, how they’ve changed, had so much to say. If GM’s making EVs, you better let ‘em.
Don McLean into Thin Lizzy? Dude, lay off the bourbon and coffee, please.
It’s Friday, Great Ones … what can I say. Anywho, CEO Mary Barra said the move was part of GM’s strategy to take on Tesla’s leadership in the EV market and to change the company’s image as a gas-guzzling carbon spewer. (You kiss your mother with that mouth?)
That’s a nice sentiment and all, but what’s GM actually doing about it? Why, spending $27 billion to deliver 30 EV models to market … by 2025!
And it’s not all just sweet, sweet EVs. Remember, GM has hydrogen technology as well. It wanted to use that tech to build Nikola Badgers, but GM realized it could just make its own.
That last point, Great Ones, is why GM will eventually eat Tesla’s lunch. GM may not be as cool as Tesla, but the company has embraced hydrogen technology — the true future of green energy. Meanwhile, good ol’ Elon Musk still calls them “fool cells.”
Tesla’s outright dismissal of this critical technology could be its undoing.
Admittedly, though, until hydrogen hits the mainstream, GM will have to put all its Detroit manufacturing might behind EVs just to catch up to Tesla. Elon has quite a lead, especially in battery technology.
And, as we all know, battery tech is the critical component in EVs. If you don’t have the right battery tech — or battery investments, wink wink — don’t even bother.
So, come on GM now … smile on your bothers! Everybody get together and try to love EVs right now.
“Get Together” by the Youngbloods? I can’t even handle you today, Mr. Great Stuff.
Yeah … sorry. Robinhood scrambled my brain, apparently. And now for something completely different, here’s your Friday Four Play:
No. 1: No Good in the ‘Hood
Speaking of Robinhood, the hedge fund’s hitman and its band of merry men were at it again this morning.
Specifically, Robinhood halted instant deposits for crypto purchases. In other words, customers could only buy currencies with existing funds. Their reasoning? The same old, same old “extraordinary market conditions.”
I get it. When Elon Musk changes his Twitter bio to “#bitcoin” and meme cryptocurrency Dogecoin jumps 800% as Reddit piles in, brokerage firms have reason to be concerned. Still, there should be a checkbox or something where you can say, “I understand the risks and admit that I want to trade stupid $#*%!”
The optics on this are clearly not good for Robinhood. In fact, many of your fellow Great Ones wrote in to tell me as much last night. What do you think? Let us know in our inbox right here.
So, I’ll leave you with this: If you’re tired of your brokerage firm moonlighting as Wall Street’s version of Net Nanny, here are three firms that didn’t block trading on GME, NOK and AMC yesterday:
- Vanguard: Website, Google Play, App Store.
- *TD Ameritrade: Website, Google Play, App Store.
- Fidelity: Website, Google Play, App Store.
Note the asterisk next to TD Ameritrade? Some of you wrote in about TD Ameritrade blocking GME trading. From what I can find, it only restricted trading and didn’t block buying GME altogether. Your results may vary, so make of that what you will.
On that note, I should tell you (and the SEC) that neither I nor Great Stuff endorse any of these brokerage firms. I’m listing them for informational purposes only.
And because Great One Jeff D. asked nicely. You’re welcome!
No. 2: Apple’s Rarefied Air
Name a better duo than Apple (Nasdaq: AAPL) and its constantly buy-happy fan base. Or Apple and its walled garden feedback loop. Or Apple and its recurring revenue growth. I’ll wait.
Actually, that last point — recurring rev — is Apple’s appealing core. I’ll see myself out…
Apple’s recent earnings are shrug-worthy at best, but that’s what happens when you shift to Services revenue from that sweet, sweet iPhone cash. There’s never a “one more thing!” kind of excitement when talking up Apple Music subs and Apple Care warranties…
But, much like we’ll see with Tesla in a sec, Apple’s fiscal first-quarter earnings actually have investors … caring?
What’s the rub? Symbolism. Kinda.
Apple’s revenue finally surpassed the $100 billion mark for the first time in a single quarter — a huge “wow, dude!” milestone for AAPL investors and a testament to the brand’s staying (and selling) power. Like a new high-water mark for Apple, it’s provocative … gets traders going.
iPhone sales alone made up nearly 59% of Apple’s $111.44 billion in revenue, which beat analysts’ estimates for $103.28 billion with room to spare. These weren’t those half-charged, low-bar pandemic expectations either: Apple’s total revenue is up 21% year over year, led by iPad revenue in particular — up 41% on the quarter!
A higher cut of Apple’s total sales is coming from overseas — 64% in the fourth quarter compared to 61% the year before. No new guidance was given, but that’s no surprise; CEO Tim Cook and co. have declined giving estimates since the pandemic began.
Earnings per share also beat analysts’ estimates, coming in at $1.68 versus the $1.41 consensus. Though, Cook did say that Apple could’ve brought in even more dough if it weren’t for those meddling kids and Scooby-Doo. Or … you know, pandemic-related store closures.
No. 3: Low Battery
When he’s not messing with meme stocks or pumping bitcoin, Elon Musk actually makes EVs and batteries and stuff at this little company called Tesla. It’s kinda profitable — not as profitable as GME calls, but what are ya gonna do?
Tesla also wasn’t as profitable as investors wanted, at least in the fourth quarter. Earnings came in at $0.80 per share, missing analyst estimates by $0.23. Revenue beat, though, hitting $10.74 million versus Wall Street’s target for $10.38 billion.
But analysts aren’t sweating the petty things like fundamentals and rising competition when it comes to Tesla. Both Oppenheimer and Argus Research boosted their TSLA price targets to $1,036 and $1,000, respectively. Both cited lower-cost battery packs, Chinese expansion and the Biden administration as drivers.
Potential Biden tax breaks and EV incentives I get. Lower costs on battery manufacturing at scale I get. But China? Sure, Tesla is a status symbol for the Chinese middle class right now … but don’t underestimate Chinese national brand loyalty.
TSLA dropped more than 7% following earnings yesterday, and the stock was down another 3.5% today.
No. 4: I’m a Big Fan
Well, well, well, who would’ve guessed we’d dive down the honey well today?
The maker of everything from welding masks to fan filters, Honeywell International (NYSE: HON), reported a bang-up fourth quarter today.
Revenue sank 6% year over year but still beat expectations: $8.9 billion versus predictions for $8.4 billion. Adjusted per-share earnings also came in above analysts’ estimates: $2.07 versus predictions for $2.
Honeywell’s fourth-quarter report is a microcosm of the industrial pandemic environment. Many of its competitors saw their manufacturing might tested when the pandemic hit the fan. But Honeywell’s multi-pronged business approach is sticky in the ever-changing market climes.
Only Honeywell’s aerospace division saw revenue decline, falling 19% year over year as the pandemic’s airline apocalypse sent aftershocks to all commercial plane part makers. But when one revenue stream wanes (aerospace, in this case), another revenue stream flows onward.
Revenue in Honeywell’s “safety and productivity solutions” segment exploded 27%, offsetting the aerospace losses. It’s no wonder why, either: This is the part of Honeywell that’s in charge of personal protection equipment and warehouse automation — the starter pack of making any business pandemic-proof.
Of course, that isn’t the only greatness going down in the manufacturing biz. 3D-printing stocks are on fire. One of Paul Mampilly’s 3D-printing stocks surged 100% in one day; others are up 150% and 500% in recent months.
And 3D printing is powering a $100 TRILLION industrial boom that’s sweeping America’s heartland. Now, Paul’s uncovered one tiny stock behind it with the biggest gains potential for 2021 and beyond.
Great Stuff: Must-See Mizrahi
It sure has been a week, Great Ones, and I’m ready to call it a day and dive into all those emails y’all have swarmed our inbox with. Let’s go into the weekend with Greatness!
Anyway … if you’re looking for something not-GameStop-related to fill your mind this weekend — some meatier morsels of market perspective, if you will — have you seen The Charles Mizrahi Show?
I know many of you follow Charles in Alpha Investor, but here’s a chance to check him out unfiltered in the flesh (or, as in the flesh as a podcast can get).
Eeeww … flesh.
He invites an esteemed celebrity guest each week. Mike Huckabee, Sean Spicer and even Paul Mampilly have all been on air with Charles recently, talking up the power of American capitalism and what it means to live the American dream.
Click here to get caught up on the latest episodes! And be sure to subscribe so you don’t miss out when the next episode drops.
Finally, remember what Mr. Great Stuff always says: Like Stuff? Share Stuff! So be sure to share ‘Stuff with your friends, family and everyone right down your email list. Send it all!
Until next time, stay Great!
Editor, Great Stuff
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